As the 2007 Farm Bill debate begins to unfold, it will be prudent to keep an eye on news items regarding the health of the overall aggregate economy. Although probably not directly related to any specifics in the farm policy arena, the economy will have an impact on budget deficit projections, which will influence the upcoming farm policy debate.
Jad Mouawad and David Leonhardt, writing in today's New York Times, reported that, "Inflation surged last month, the government reported yesterday, as the long rise in energy prices finally seemed to be pinching the American economy. After absorbing the burden of oil at $40 a barrel, then at $50 and beyond, consumers have started to react as prices have risen above $60 in recent weeks."
Vikas Bajaj, also writing in today's N.Y. Times, reported that, "Record oil prices are beginning to slow the economy, according to several reports released yesterday, but expansion continued in July because of the housing market and demand from businesses and consumers."
And Washington Post reporter Nell Henderson reported in today's paper that, "
The U.S. economy has grown at a healthy pace this year and even showed signs of gaining momentum in recent weeks, despite a 14.2 percent rise in energy prices over the year that ended in July. Consumers have been snapping up autos and bidding up house prices with gusto, while businesses have boosted their spending on equipment and software.
"But many analysts remain concerned that the expansion may slow sharply if rising energy prices force consumers to cut their spending on other items and cause businesses to pull back on new investments. The rise in the July CPI primarily reflected a 3.8 percent increase in energy prices, including a 6.1 percent jump in gasoline prices."
In more specific agri-business news, Michael J. McCarthy and Scott Kilman reported in today's Wall Street Journal that, " Deere & Co., the tractor and lawnmower maker, blamed a widespread dry spell, particularly in its core heartland market, for a 3.5% drop in fiscal third-quarter net income and a reduced full-year forecast."
The article also indicated that, "Deere's slump is another sign that the economic boom across the Farm Belt is beginning to cool. Driven in large part by high beef prices, large crops and sweetened federal subsidy programs, net farm income hit a record-high $73.6 billion last year. Now, with livestock prices easing and drought slicing the size of Midwest corn and soybean crops, this rough measure of farm profitability is widely expected to slip this year to roughly $61 billion, which is still a relatively high level."
In addition, the Journal article noted that, "Still, the farm season is hardly a disaster. Despite vast swaths of parched fields, so many farms outside that drought zone are expecting strong yields this year that the U.S. is still in a position to produce its second-largest corn crop ever. The drought, which stretches from eastern Texas to Wisconsin, has so far missed most of Iowa, Minnesota and Nebraska, among other states."
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Contact Keith Good at:
[email protected] or call 217.553.5206FarmPolicy
